Your best friend, Anthony, approached you to invest in his business. In 2019, he started a business providing cleaning and disinfection services for offices and homes. While sales slowed down during the work-from-home period when employees work from home, he shared that this was more than offset by the rising demand for deep cleaning services from homeowners. You requested from him the latest set of financial statements. However, he asked you not to put too much focus on the financials citing the flaws and limitations in financial statements. (a) Identify the key financial statements. Describe the information reported in each of the financial statements and how they can help you in your investment decision. (b) Examine the limitations of financial statements. Discuss what other information you would request from Anthony to help your investment decision
Your best friend, Anthony, approached you to invest in his business. In 2019, he started a business providing cleaning and disinfection services for offices and homes. While sales slowed down during the work-from-home period when employees work from home, he shared that this was more than offset by the rising demand for deep cleaning services from homeowners.
You requested from him the latest set of financial statements. However, he asked you not to put too much focus on the financials citing the flaws and limitations in financial statements.
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(a) Identify the key financial statements. Describe the information reported in each of the financial statements and how they can help you in your investment decision.
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(b) Examine the limitations of financial statements. Discuss what other information you would request from Anthony to help your investment decision.
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